forfeiture of gratuity
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The Payment
Of Gratuity Act,1972
Presented By:-
Pavithra -19
Sampada -20
Sangeetha -21
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INTRODUCTION Gratuity is a word derived from Latin word
Gratuities which simply means a gift.
In the industrial sector it can be treated as a giftfrom an employer to his employee for the services.
Gratuity is a benefit, which an employee gets at
the time of retirement or when he leaves theestablishment.
In the present context, it means, a sum of moneypaid to an employee at the end of employment.
Gratuity in case of retirement, superannuation or
death helps family to adjust in a new situation inwhich income ceases partially or completely.
Gratuity Schemes, serves as an important tool ofsocial security.
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OBJECT OF THE ACT
To provide for a scheme for a for thepayment of gratuity to employees
engaged in factories, mines, oil fields,plantations, ports, railway companies,shops or other establishments.
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Extension of Gratuity Act, 1972
The Payment of Gratuity Act, 1972 appliesto the whole India except State of Jammu
& Kashmir in so far as it relates to portsand plantations.
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Application of the Gratuity Act Every factory, mine, oilfield, plantation, port and
Railway Company.
Every shop or establishment within the meaning of any
law for the time being in force in relation to shops and
establishment in a State, in which 10 or more persons
are or were employed on any day in the preceding 12
months.
Such other establishments or class of establishment, in
which 10 or more employees are or were employed
on any day in the preceding 12 months, as notified by
CG by way of a notification in the Official Gazette.
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Appropriate governmentmeans:
In relation to an establishment
Belonging to, or under control of Central
Government, Having branches in more than one state,
Of a factory belonging to, or under thecontrol of Central Government,
Of a major port, mine, oilfield or railwaycompany, the Central Government
In any other case, the State Government .
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Completed year of servicemeans:
Continuous service of one year.
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EMPLOYEE meansAny person (other than apprentice) who is
employed for wages, whether the terms of suchemployment are expressed or implied,
in any kind of work, manual or otherwise,
in or in connection with the work of the factory, mine,oilfields, plantation, port, railway companies, shop orother establishments to which this act applies.
Exception Persons employed in state or CentralGovernment and post which is governed by anyother act or by any rules providing for payment ofgratuity.
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EMPLOYER means: "employer" means, in relation to any
establishment, factory, mine, oilfield, plantation,
port, railway company or shop
In case of state or central govt. a person orauthority appointed by the Government for the
supervision and control of employees, or where no
person or authority has been so appointed, the
head of the Ministry or the Department concerned,
In case of any local authority, the personappointed by such authority for the supervision and
control of employees or where no person has been
so appointed, the chief executive office of thelocal authority,
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Continue
in any other case, the person, who, or the authoritywhich, has the ultimate control over the affairs of the
establishment, factory, mine, oilfield, plantation, port,railway company or shop, and where the said affairsare entrusted to any other person, whether called amanager, managing director or by any other name,such person;
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FACTORY
Factory has the meaning assigned to it inclause (m) of sec.2 of Factories act 1942.
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DEFINITION OF FAMILYIn Case of Male
Employee
Himself
His wife
His children whethermarried or unmarried
His dependant parents
The dependant parentsof his wife and the
widow Children of his
predeceased son, if any
In case of FemaleEmployee
Herself
Her husband
Her children whether
married or unmarried
Her dependant parents
The dependant parents
of her husband & thewidow
Children of her
predeceased son, if any
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Retirement
Means termination of service of anemployee otherwise then on
superannuation.
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Superannuation
By Superannuation is meant the act of getting
relived from service on attaining a specified
age which is prefixed, say, 58 years of age.On the other hand, Retirement is also an act
of relieving from service but not necessarily be
due to attaining a prefixed age and shall
include Voluntary Retirement or even
Compulsory Retirement. Thoughsuperannuation is also retirement, the latter
need not be superannuation.
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Wagesmeans all emoluments which are
earned by an employee while on duty
or on leave in accordance with theterms and conditions of hisemployment and which are paid orare payable to him in cash andincludes dearness allowance but does
not include any bonus, commission,house rent allowance, overtime wagesand any other allowance.
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continuous serviceAn employee shall be said to be in continuous service for a period if
he has, for that period, been in uninterrupted service, includingservice which may be interrupted on account of
sickness,
accident,
leave, absence from duty without leave (not being absent in respect of
which an order treating the absence as a break in service hasbeen passed in accordance with the standing orders, rules orregulations governing the employees of the establishment),
lay-off, strike or
a lock-out or
cessation of work not due to any fault of the employee,
whether such uninterrupted or interrupted service was rendered
before or after the commencement of this Act.
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CONTROLLING AUTHORITY
The appropriate Government, may, bynotification, appoint any officer to be a
controlling authority, who shall beresponsible for the administration of thisact and different controlling authoritiesmay be appointed for different areas.
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Payment of Gratuity Gratuity shall be payable to an employee on the
termination of his employment after he has
rendered continuous service for not less than fiveyears, -
(a) on his superannuation, or
(b) on his retirement or resignation, or
(c) on his death or disablement due to accident ordisease : Provided that the completion of continuousservice of five years shall not be necessary where thetermination of the employment of any employee isdue to death or disablement .
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Calculation of Gratuity
Gratuity Amount payable under Payment of Gratuity Actenhanced from Rs.3.5 lakhs to Rs. 10 lakhs
As Per
Payment of Gratuity (Amendment) Act,2010 (No. 15 of
2010), dated 17-5-2010
Section 4 (4) now reads as
The amount of gratuity payable to an employee shall not exceedTen Lakh Rupees
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Forfeiture of Gratuity: [Sec 4 (6)]1. Forfeiture to the extent to the damages/ loss: if the services of an
employee have been terminated for:
i. any act
ii. Willful omission, or
iii. Negligence
Causing any damage or loss to, or destruction of, property belonging to theemployerthere the gratuity shall be forfeited to the extent of the damageor loss so caused.
2. Wholly or partially forfeiture or gratuity: a) where if the services of suchemployee have been terminated for his riotous or disorderly conduct orb) if the services of such employee have been terminated for any actwhich constitutes an offence involving moral turpitude.
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Compulsory Insurance: Employers liability to obtain insurance: The Payment of Gratuity
Act,1987 has prescribed provisions for compulsory insurance for
employees, which introduces employers liability for paymenttowards the gratuity under act from LIC established under LIC of
Indian Act, 1956 or any other prescribed insurance company.
Exemption to the employers from obtaining insurance: The
Appropriate Government may also exempt a) employers who
have already established an approved gratuity fund in respect ofhis employees and who desires to continue such agreement and
b) employers having 500 or ore employees, who establishes and
approved gratuity in the manner prescribed.
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Employer to register his establishment with the controllingauthority: For the purpose of this section, every employer shallwithin a prescribed time get his establishment registered with
the controlling authority in the prescribed manner, and onlythose employers who have taken an insurance as referred aboveor has established an approved gratuity fund shall be registered.
Appropriate government may make rules: To give effect to theprovisions of this section the govt. may make rules provided forthe compensation of Board of Trustees of the approved gratuityfund, and for the re3covery by the controlling authority of the
amout of gratuity payable to employees of LIC or any otherinsurer with whom an insurance has been taken.
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Employers failure to pay premium/contribute to thegratuity fund: if the employer fails to pay premium to
the insurance or to contribute to an approved gratuityfund, he shall be liable to pay them a amount ofgratuity including interest, if any, for delayed payments. To the controlling authority.
Penalty: Its contravention is punishable with a fine uptors 10000/- and in the case of an continuing offence witha further fine which may extend to rs 1000/- per dayupto the duration the offence continues.
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Power to Exempt
The appropriate govt. may, by notification and subject to suchconditions as may be specified in the notification, exempt anyestablishment, factory, mine, oilfield, plantation, port, railwaycompany or shop to which this Act applies from the operation of the
provisions of this Act:
If in the opinion of the govt. the employees in such establishment,factory, mine, oilfield or shop are in receipt of gratuity orpensionary benefits not less favorable than the benefits conferredunder this Act.
If in the opinion of the govt. such employee or class of employeesare, in receipt of gratuity or pensionary benefits not less favorable
than the benefits conferred under this Act. A notification issued under subsection (1) or subsection (2)
may be issued retrospectively a date not earlier than the date ofcommencement of this Act, but no such notification shall be issuedso as to prejudicially, affect the interests of any person.
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Nominations for Gratuity:Normally , the gratuity is paid to the employee by his employer,where his services are terminated due to any reason in hislifetime, but after death of the said employee, the earned gratuity
is to be paid to his successors and to avoid any type ofcomplications, the provision of the nomination by the employeeto get the gratuity, in case of his death is made. The provisionsare as below:
Nomination by the employee after the completion of 1 yearservice
Distribution of gratuity amount Nomination in favor of one or more family members
Nomination by the employee having no family/ subsequentlyacquiring family
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Modification in nomination by the employee
In case of death of nominee
Nomination to be kept by the employer
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Procedurefor nomination:
1. Nomination form to be submitted in duplicate to
the employeer
2. Submission of the form
3. Acceptance of the form beyond the specified time
4. Period for submission of fresh nomination after
acquiring a family
5. Notice of modification of nomination
6. Nomination duly signed by the employee
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Application for the Payment of
Gratuity:
1) An employee who is eligible for payment of gratuity under theAct, or any person authorized, in writing, to act on his behalf,shall apply ordinarily within 30 days from the date of the
gratuity became payableBut if the date of superannuation or retirement of an employee isknown, the employee may apply to the employer before 30 days ofthe date of superannuation or retirement.
2) A nominee of an employee who is eligible for the payment ofgratuity in case of death of the employee, shall apply to theemployer ordinarily within 30 days from the date of gratuity
becomes payable to him.An application on plain paper with relevant particulars shall also beaccepted. The employer may obtain such other particulars as may
be deemed necessary by him
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3) If an employee dies without making a nomination,
his legal heir, who is eligible for the payment of
gratuity , shall apply, ordinarily within one year fromthe date of gratuity became payable to him.
An application even after the prescribed period shall
also be entertained by the employer, if the sufficient
cause for the delay has been mentioned in theapplication. Any dispute in this regard shall be refrred
to the Controlling Authority for his decision.
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Employers Duty Regarding the
Payment:
1. Determination of the amount of gratuity by the employer: assoon as the gratuity becomes payable, the employer shall,whether the application for the payment of gratuity has been
given or not by the employee, determine the amount ofgratuity and give notice in writing to the person to whom thegratuity is payable and also to the controlling officer.
2. Provision of interest on gratuity amount: if the amount ofgratuity payable under sub-section (3) is not paid by theemployer within the period specified i.e 30 days, the employershall pay, from the date on which the gratuity becomes payable
to the date on which it is paid, simple interest at such rate, notexceeding the rate notified by the Central Government fromtime to time for repayment of long term deposits, as the govt.may, may notification specify.
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3. Notice for payment of gratuity:
i. Claim for gratuity found to be admissible
ii. If the claim for gratuity is not found admissible
iii. Issue of notice to the applicant
iv. Claimant is nominee/ legal heir
v. Services of notices on the applicant
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Mode of Payment of Gratuity:
The Gratuity shall be paid either
In cash or
In demand draft Bank cheque to the claimant.
When the nominee or legal heir is a minor
the amount shall be deposited with
SBI or any of its subsidiaries or
any Nationalized Bank
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Disputes
1. Filling of application on the disputerelating to payment of Gratuity
2. Payment of gratuity amount after inquiryand hearing of the parties to thedisputes
3. Payment of the amount, where there is
no dispute
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Procedure for Dealing withApplication for Direction
1. Issue of notice to appear beforecontrolling authority
2. Representation on behalf of theemployer/ claimant before theControlling Authority
3. Employers fail to appear
4. Review of order
5. Record of particular of case
Direction for payment of Gratuity
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Appeals
1. Appeals to an order
2. Modification of an order
3. Admission of appeal on the production
of the certificate of the deposit ofgratuity
Appointments of Inspectors
By notification , the appropriate Government mayappoint as many inspectors, as it deems fit, for thepurpose of the Act.
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Recovery
Application for recovery of gratuity
1. Penalty for avoiding of any payment to
be made
2. Penalty for contravention and default incompliance of any provision
3. Penalty for non-payment of gratuity
payable under the Act
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Exemption of Employer fromLiability
Where an employer is charged with anoffence punishable under this Act,
he can , after giving three days clearnotice of his intention to do so,
bring any other person whom he chargesas the actual offender, before the court
at the time fixed for hearing the charge.
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Cognizance of Offence
No court take cognizance of any offencepunishable under this Act except on the
complaint made by or under the authorityof Appropriate Government.
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Miscellaneous
Power to make rules
Notice of opening, change or closure of
the establishment.
Display of notice
Display of abstract of the act & rules
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Thankyou
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